Posts tagged ‘economic’

As this year is coming to an end, how have your operations emerged from the Great Recession? The 2012 Logistics Management survey has revealed major trends and offers a first-hand look into the state of today’s DC and warehouse operations:

52 percent of respondents are adopting a more cautious approach, spending less than $250,000 for warehousing equipment and technology in 2012.

17 percent of respondents are spending $1 million or more in 2012, and another 16 percent are planning to spend that same amount in 2013.

“2011: A rather unremarkable year” for logistics statistics.

From time to time an article grabs my attention enough to make me want to share it. The 23rd Annual State of Logistics report by The Council of Supply Chain Management Professionals (CSCMP) was such an article.

This report provides a clear indication of the current position of Logistics in the USA and looks attrends within the industry that will impact your business, today and tomorrow. The report highlights the fact that recovery of the economy has been very slow and inconsistent. The fragility of the world’s economy will continue this trend and make business’ focus on efficiencies in their supply chain.

Some key highlights of the report:

Inventory carrying costs increased 7.6% over prior year

Logistics cost equaled 8.5% of GDP in 2011 – trending up from a low of 7.9% in 2009

Trucking (77% of transportation component) increased 6.2% year on year

Rail grew 15.3%

All other transport sectors declined

Intermodal was the real growth element of transportation – a trend that will grow very significantly in the near future.

The report takes an in-depth look at each transport mode & explains the basis for trends in each.

3PL’s in Asia are still, on average, behind the USA in take-up of technologies like EDI, scanning and RFID. They are however rapidly catching up.

They are also very focused on a flat world. As the manufacturing hub of the world Asia is truly thinking and acting globally. Those US (or European or Australian) service providers with partnerships or informal relations in Asia will grow their business on the back of those arrangements. Those providers who are focused inwards will miss the opportunities.

By getting in now, making contact with local providersand assisting them through knowledge and technology transfer, long term relationships can be built that will be profitable for all players.

In the current market the 3PL provider has two choices, substantially increase revenue from value added services or struggle to survive in a storage focused world with diminishing inventory.

Arguably the recession is over, but this one is different. Unemployment is still high, inventoriesare still being held back and neither is looking at changing in the foreseeable future. Traditional 3PL truckload in, truckload out businesses are suffering and there seems little hope of a turnaround.

To prosper today,the industry must move towards a much higher proportion of revenue from value added services. In discussions with our own 3PL partners, we are seeing significant growth in those who are able to move their business into the fulfillment arena or offer 4PL type services to their customers. We are also seeing those locked into a storage/handling model suffering and losing business.